May 22, 2003|By David Nitkin, Tim Craig and Michael Dresser | David Nitkin, Tim Craig and Michael Dresser,SUN STAFF
Gov. Robert L. Ehrlich Jr. knocked the state budget out of balance yesterday by vetoing a $135 million corporate tax package, and he also rejected legislation permitting undocumented immigrants to pay in-state tuition at Maryland universities.
Ehrlich's long-promised veto - one of 19 issued yesterday - was criticized by Democrats who said the governor was placing corporate profits ahead of the needs of average citizens. The governor brushed aside those concerns, saying he was ushering in a new chapter in state governance.
Fiscal responsibility is in, he said, and the days of trading votes for expensive new programs is over. "Elections have consequences," Ehrlich said. "These are tangible results from an election where people said, `We want change.' "
The governor said he and his staff vigorously debated the merits of some of the most contentious measures passed by the General Assembly this year but haven't finished their work.
Today, Ehrlich is expected to reveal whether he will sign or veto three high-profile bills: a reform of the CareFirst BlueCross BlueShield board of directors, the decriminalization of marijuana for critically ill patients and a study of the easing of driver's license requirements for immigrants.
Other decisions announced yesterday mean that speed-radar cameras will not be legalized and walking will not be designated as the official state exercise. "We found that walking was not indigenous to Maryland," Ehrlich said, planting his tongue in cheek. "We're trying to get away from the era of silly bills."
The era will not start immediately, however: The governor released a list of bills he plans to sign into law today, including legislation designating the thoroughbred as the state horse.
The debate over the tax bill consumed Annapolis yesterday, taking on a sharply partisan tone. Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch, both Democrats, accused Ehrlich of reneging on his pledge to govern as a moderate.
By rejecting revenue used to balance the $22.4 billion budget, they said, the governor will force deep cuts that will violate his campaign promises to protect state workers, schools and local governments from fiscal harm.
The bill would have prevented companies from avoiding Maryland taxes by transferring assets to holding companies in Delaware. It also would have imposed a 2-percent tax on health maintenance organization policies, and impose a 10-percent corporate income tax surcharge for three years.
"Life is about choices, and I believe the governor is making the wrong choices," Miller said.
Miller and Busch said the legislature may try to override the corporate-tax veto when it reconvenes in January.
The governor has yet to announce how he will fill the budget hole created by the tax-bill veto. Hours before issuing his decision, Ehrlich defended his budget-cutting plans at a morning Board of Public Works meeting. He said he has ordered all department heads to cut 7 1/2 percent from the budget that begins July 1, noting that skyrocketing Medicaid expenses must be curtailed.
But Comptroller William Donald Schaefer, who has been an Ehrlich ally, criticized the governor's approach, saying that people would be hurt. "You just can't say to people, we're going to knock you off the roll, we're going to knock you out of the game," Schaefer said. "You just can't take that 7 1/2 percent."
Other leading Democrats also reacted angrily to the governor's decision to allow corporate tax-avoidance while cutting the budget. A few weeks ago, Ehrlich signed off on an increase in the state portion of property tax bills that would add $96 a year to taxes of the owner of a home assessed at $200,000.
"People would very much support fairness in our tax code and having corporations pay their fair share," said Baltimore Mayor Martin O'Malley. In a statement released later in the day, the mayor said: "When all of us get our higher property tax bills next year, we need to remember that the governor who promised he wouldn't raise our taxes raised our taxes, but preserved corporate loopholes."
The advocacy group Progressive Maryland raised ethical questions yesterday about Ehrlich deciding on the tax bill, noting that Ehrlich's wife, Kendel Ehrlich, is an employee for Comcast; in a story on Delaware loopholes published last month, the Philadelphia Inquirer reported that Comcast uses 400 Delaware subsidiaries to avoid taxes. Kendel Ehrlich said yesterday that she was not familiar with the tax issue and had not talked to her husband about it.
Hispanic activists condemned Ehrlich's veto of the immigrant tuition bill, which would have allowed undocumented immigrants who graduate from Maryland high schools to pay the lower in-state tuition rates. It conflicts, they said, with his earlier pledges to show compassion for people in need.
